Tuesday, June 30, 2009

At first, I discovered the Bubble Blogs. About 3 years ago. Especially the nationally oriented, Housing Bubble Blog. It was fascinating to read the destruction of huge swaths of Florida and California and Nevada and Arizona, and comparing it to the sheer blindness and short-sightedness of the local real estate market and the local media.

Then, as the stock market tanked, I found the national economic blogs, and settled on Calculated Risk, The Big Picture, Naked Capitalism, Financial Armageddon, and Mish's Global.

These became essential reading for me.

Over the last six months, I've pretty much stopped reading the Housing Bubble Blogs (not including Bend's own BendBubble2, which has morphed into an all purpose grumblefest), because that bubble done burst.

Haven't done an update in nearly a month, because nothing much has changed. I heard the St. Clair coffee stand closed, that's it.

But I wanted to comment on downtown doings.

As you know, I've been skeptical of the usefulness of downtown street closures for some time. I don't feel they were particularly useful during the boom years of 2004 to 2008 or so, because they took up peak weekends that would've been very busy -- with actual customers -- anyway.

But in talking to another downtown merchant, and looking at my own sales, I'm willing to admit I might have been wrong. With the business climate being what it is, such festivals are mostly a plus, right now. And I suppose I can't have the festivals 'only' on the bad years.

It's a plus not so much for me, but I think some of the other businesses. Anyway, much as they are a hassle, and though I may still mutter and grumble about them, I'm not going to advocate against them.

I think it's also important that I've 'mainstreamed' my store, especially with books, so that I now pick up a little business from these things.

This isn't a green light to add a bunch more events, however!

Secondly, I'm started to see now, by talking to some other merchants, how some businesses are surviving. Lower rents. I think rents have been lowered significantly in some places.

I'm not in a position to ask for further rent decrease, because I'm earning a profit, but if that wasn't happening I'd probably be trying to talk my landlord into breaks, and I think that's what's been happening.

And finally, I've always advocated really cheap parking rates for downtown employees. But that will only work if the penalties for not parking in the garage were draconian. I think both the carrot and the stick are necessary.

Really, two hours is sufficient in my opinion for most purposes. Remember that they stop giving tickets after 4:00 or 5:00 so it really doesn't impact on restaurants for evening meals. I kind of agree with the parking guys that three hours would just encourage abuse.

I want you to know, that I buy a parking tag for the garage every 3 months, I consider it part of the price of business downtown, and I park faithfully in the garage every day.

It ain't that hard.

And finally, I kept wanting to mention the Benjamin's Furniture closure, because it seemed significant.

About a year and a half ago, I wrote a blog about how there were were something like 40 furniture stores listed in the Yellow Pages and less than 10 new homes being built. That didn't compute.

Forget what you hear or read. Do the math. Compare new homes to how many businesses we have which are dependent on new homes. If it doesn't make sense, there's something wrong.

Monday, June 29, 2009

What's a small business to do when it's beset from all sides by major changes?

I'm not talking about the economic downturn. I'm talking about paradigm shifts in how product is created, delivered and priced.

My own answer is -- this isn't new. This has always happened.

My own solution is, diversify, diversify, diversity.

NOOKS AND CRANNIES.

Find the nooks and crannies that aren't being filled. Not just one nook or one cranny, but all the nooks and crannies you can find. In every major product there is an opportunity to make a little money.

GO FOR THE 20%, NOT THE 80%.

Unfortunately, the opposite is also true. In every major product there are few opportunities to make major money. If there is major money to be made, you can be sure that the mass market and the online discounters have found a way to do it.

So you look to go over, under, or around these obstacles.

GO FOR THE 80%, NOT THE 20%. (I'll explain the contradiction, down at the the bottom...)

The biggest example of change right now, is Kindle. And I think we've already seem something similar happen.

For example -- if you are a music store, you may find that you can sell vinyl albums. But you can't ONLY sell vinyl albums. (I'm sure there are some, but I haven't heard of any music shops that sell only vinyl, at least not in small towns....)

Someday in the future, when Kindle has the killer apps of audio books, and faux book-feel, books will be like vinyl albums. Not something you can base a business on, but a nice little niche.

ON THE RETAIL SIDELINES.

As a pop-culture store, I've learned that I can profit from a trend halfway up the curve, and then again when it's more than halfway down the curve. The upper half of the curve will be immediately seized upon by the mass market, or if they are too slow, the online retail.

SOME EXAMPLES OF NOOKS.

SPORTS CARDS:

The sport card companies realized too late and too little, that the card shops were disappearing, and so they offered us product that was 'slightly' better, to compensate for the much higher prices. It's worked for me as a niche, but I can't imagine it could work as a full business.

TOYS:

The toy companies are coming up with 'singles' that I can buy, so that I don't have to gamble on cases. I've figured out pricing methods that allow me not to lose money. And there is the whole 'Designer Toy' movement. None of these make me much money, but they all add to the total.

CARDBOARD STANDUPS:

Standups -- are like the perfect niche product for me. No one really does them, because they take up so much room, because they are perceived as high priced, because the shipping costs are horrendous. So I try to find ways to get around all those problems. Not a big money maker, but a good illustration.

COMICS ARE ONE THING, GRAPHIC NOVELS ANOTHER:

Comics are already a 'vinyl records' type business. Complicated and idiosyncratic enough to keep out the mass market. But at the same time, graphic novels can be done by the mass market and especially online, and it is only a matter of time before someone figures out how to do it right. At which point, instead of being the base of my sales (comics and graphic novels are about 50%), they will become yet another niche product.

GAMES:

Boardgames have long been dominated by the mass market. Monopoly, Scrabble, Life, Risk, and so on are so cheap at these stores, that there is no point in me even carrying them. But they haven't quite noticed the Euro games like Settlers of Catan, Ticket to Ride, and Carcassonne. Allowing me to make a small niche profit. But, these games are quickly approaching the halfway mark up the curve, and it's only a matter of time.

NERDS, NERDS, INFESTED WITH NERDS:

Role-playing games have always been a little too weird for the mass market, and a little too fickle. Magic never was able to penetrate the mass market, despite it's size, because it required too much specialized knowledge and never got quite big enough to be a 'loss-leader.'

MY NEW FAVORITE -- NEW BOOKS.

My experience with new books has taught me a different lesson. For years, I stayed away from any product that had a major mass market presence, especially a 'discount' presence.

But after carrying used books for a number of years, I realized that certain authors and certain titles were being constantly asked for, but rarely came in used. I noticed the books which were my favorites and which I recommended were always gone.

What would happen, I wondered, if I carried just those books new?

This gave me a wedge into the new book market, which I've continued to widen and explore.

And so on. Nooks and crannies throughout my store. Either entire product lines that because of difficulties or because they don't make big money, that the chainstores ignore, or aspects of major products that do make big money but are neglected. There are many more, but I won't try to detail them all.

None of these products by themselves would be enough to keep my store alive, but a little sliver of each amounts to a whole.

A MIND-EXPERIMENT:

I wish I knew how to draw diagrams on this blog, but I think I can illustrate this if you can just imagine two pyramids side by side.

PYRAMID #1.

On the narrow peak of the first pyramid, think: Potential comic customers.At the wide base of the pyramid, think: Product. A large amount of product.

The narrower the aperture of customers, the wider range of product you have to carry in order to capture a sale.

PYRAMID #2.

Now go to the second pyramid.

At the base of this pyramid, think: Potential new book customers.On the narrow peak of the second pyramid, think: Product. Fewer but choice selections will fit the bill.

In other words, the wider the customer base, the narrower the focus of product can be.

(By the way, as an interesting sidenote; fads always start off as the second kind of pyramid. Lots of customers, and relatively few lines of product. The problem comes when that pyramid flips, the customers become fewer and the product lines become wider. Or even more dangerously, the pyramid base shrinks into a stick and disappears altogether. You have to recognize this when that's happening, or else. Poof! Poof! go your customers! Poof! goes the fad! Poof! goes your business....)

These narrow apertures are my entry into the market. My wedge, if you will, into finding a nook or cranny that I can gainfully use.

It sounds easy but it's anything but.

The first pyramid (few customers, large inventory) has been my model for most of my career. But think what it requires. In every little narrow peak, whether it be comics, or games, or cards, or toys or whatever, I have to carry a large inventory without having large sales to pay for it.

You do it systematically, slowly, within cash-flow, looking for every opportunity to increase your selection. (I never let a Sale pass without trying to take advantage of it.)

The second pyramid (many potential customers, relatively narrow inventory) is more or less new to me. I think it's only possible BECAUSE I have the first pyramid scheme in place and can sell to those customers, as well as being in a high traffic location, as well as being in business for 30 years. I doubt very many bookstores could do well being quite as selective as I am.

There are some side benefits to this kind of strategy. No other store is likely to duplicate exactly the same nooks and crannies as I am. I can constantly adjust up and down the amount of support I give, in money, time and space, to each line of product, based on outside conditions like competition or availability.

Much of this runs counter to business advise from experts -- especially carrying the large inventory that turns over relatively slowly -- but I've proven to my own satisfaction that it works for me.

Linda and I played Settlers of Catan over at Aaron and Char's last night.

Char whooped us again.

She acts almost guilty about it. I told her not to, I was going to keep playing until I figured out how to win.

I think it's just that I'm so vocal in defeat. (Imagine that, me being verbal about something.) Not a sore loser, really, but expressive.

After a while, she couldn't help but start giving advice. "You know, Duncan. If you put a road there...." Or she'd kind of go, "Uh, are you sure about that...?" At first, I was a little irked by her advice, but I could see that she was right, so after she won the first game handily, I started taking some of her advice.

I started saying, "What should I do now, Obi-char?"

"Is this a good move, Jedi-master?" At least I think she's Jedi. She might be Sith...

Nah, she's Jedi.

After one of my frustrated outbursts, she turned to Linda, and shook her head. "Frustration, there is much in this one. Ready, he is not...."

I think she just sees the board more clearly. Figures out the angles much quicker.

It's good for me. I can tend to think I'm so smart. Running my own business, there is no one to contradict me. I start to get a little full of myself. So it's humbling when everyone is better at a strategic game than I am.

I've started to notice a few things:

I'm always trying to correct the mistakes of the last game.

I'm addictive when I'm not winning. I want to keep playing until I win.

I tend to focus on one part of the board too much.

I tend to set all my moves in preparation of beginning to get going, getting ready to get started to start thinking about winning. And then the game is over.

Wait, what does that remind me of?

Oh, yeah. My business. It's a great analog to my business. Always preparing for the future, which never quite arrives. Always trying to correct the last mistake. It's something to think about as I approach the endgame of my career. (Not this minute mind you, but in the next decade or so...."

Sunday, June 28, 2009

A local blogger came in, and I realized he thought my last blog (about "dire" economic times) was about me. So when I asked him if I was clear that I am doing just fine, thank you, he shook his head. "It sounded like you're discouraged," he said.

In rereading the entry, I can see how he could've come to that conclusion. But I wasn't talking about my store, I was talking about the overall Bend economy.

Well, I suppose I am discouraged at not making even more of a profit, but the point is we are doing better than O.K. and better than fine.

But I don't want to brag about it, either. Because other people are indeed feeling the stress.

I guess no one else can know how close and hard it was for my store for so many years, so that this little economic conniption fit actually seems like a walk in the part in comparison.

I risk by talking about how bad something is, that other people will mistake the message for the messenger.

As I've always said, when I STOP talking about it, that's when I'm in trouble. Right now, I'm feeling, well, kind of smug for guessing right so far.

I always try to put a little message in there about how we're doing -- but I don't want to make too much of it, or it will sound too defensive or worse, gloating. So....

I'm going to keep posting my little messages, and hope you all can read between the lines.

**********

Apparently, Cascade Business News thinks we're undergoing a V shaped recovery. Since they got their graphs from Bloomberg, someone at Bloomberg thinks so too.

Thing about graphs, if you widen the time, or narrow the graphs, or squeeze the time or widen the graph, or make it taller, or with longer intervals or with larger or smaller numbers;

You can make a graph look like anything you want. Steep or flat, long or short, v shaped or u shaped.

They're fun, but they often don't really show anything but the maker's bias.

I don't know if there is a "Center for Graph Ethics" (or for that matter, a "Center for Statistics Ethics") but unless there is single standard for everyone, graphs can just be manipulated too much.

I repeat: You can use a graph to illustrate whatever point you want.

I suppose there are people using graphs to try to illustrate an objective truth, but that means you need to look closely either at the motivations of the graph-maker, or even more importantly, look at the graph itself and try to ascertain whether it is legit.

I tend to think in terms of seasonality. As I've always said, I make money four months out of the year, lose money four months out of the year, and break-even four months out of the year.

So, if we miss out on the money making months, we have to endure the other 8 months. This is the problem with basing a town's economy on tourism.

Anyway, all this dire news is taking place at the BEGINNING of summer, which means the next two months are pretty much shot, also. Including June, that's three of the four good months gone. Then 3 slower months, then Christmas, and then another 5 slow months.

Which to me means, the Bend retail economy has almost no chance of recovery for the next year or so. I'm betting next summer won't be much better. Because the housing and building trades -- I'm pretty sure -- aren't going back up for a long time (anyone need a house built? A new hotel? How about a mall?), and the foreclosure crisis will be really zeroing in about then.

Don't let all the talk of green shoots fool you, we're are a long way from recovery. In fact, I think we're still a long way from bottom. Especially in Bend. We'll be hearing about the rest of the country picking up long before it happens here.

Yes, businesses are opening. And they are all whistling past the graveyard. 7 coffee shops in downtown Bend? No problem!

Don't get me wrong. I'd rather have these spaces full. But is it a sign of of success, or a willingness to gamble? A sign of opportunism? A sign, even, of desperation? For instance, I've noticed that some businesses are bailing out of smaller towns around us and relocating in Bend. Is that a sign of strength, or an acknowledgment that the small town thing wasn't working?

I think people are betting it all on downtown Bend, because it seems to be the only vibrant part of the city for small business. Which is true, I suppose. Where else are you going to go?

I guessed a couple of years ago, that the froth of downtown Bend's appeal might just bridge the economic gap. It'll probably be close. Two years from now, the shine will probably be tarnished a bit. But by then, there might be a few of those 'green shoots' for real.

I'm getting fairly high foot traffic, but a very small per-customer average. So I'm hitting my averages by working twice as hard, essentially. Turns out, filling my store with product was the right thing to do in this kind of atmosphere.

The empty parking spots are kind of interesting. So the only explanation for the foot traffic is that the retail around me has grown so much since the last time I kept customer counts, that even a slowdown doesn't bring it down to the old levels.

As I've said, this is a relatively easy slowdown for me to deal with -- I'm feeling amazingly confident -- compared to past situations. I can't believe I'm saying this, but I'm thankful for those experiences -- as bad as they were at the time -- because they trained me how to deal with this, and most importantly, I know what to expect emotionally and how that all plays out.

That's really important. How you deal with the disappointment, how you accept it, and still keep your equanimity. How even, you look for opportunities in the chaos.

I'm really bemused by all the business activity downtown, businesses closing and businesses opening almost as fast. Thankful for it, because it's fun to watch as it plays out. Some will succeed, some won't -- which isn't all that different from normal times, except maybe accelerated.

Saturday, June 27, 2009

Another longtime downtown Bend merchant was saying to me how she thought the Saturday crowd was "different." As in, "harder to deal with."

"Really?" I said. "I thought I was the only one who felt that way."

"No," she answered. "I think most retailers feel that way."

**********

Duncan's Bubble Laws. (If you'll indulge me.)

1.) Bubbles go higher and last longer than you think they will.

2.) They end quicker than you think they will. (I know that seems like a contradiction, but both feel true.)

3.) They end from an unforeseen and unpredictable event.

4.) They drop further (usually past where they started) and last longer than you think they will.

Obviously, we're dealing with the fourth of the laws.

And I keep reminding myself, Further and Longer.

Further and longer.

Yesterday, Friday, was kind of a strange day. I broke my average by a little bit, but I kept looking out the window and seeing empty parking spots. Same as Thursday.I can't tell you how strange that seems.

I'm also going to meet my mid-case average for the month, but most of that is attributable to a very strong first ten days. The last ten days, have been fairly weak. So the trend isn't what I'd like to see.

Of course, it could also be like trying to guess Christmas business on the 15th of December, (which I can't help doing every year despite knowing better), but which really doesn't mean much.

So, I'm going to expect July and August to be better, but not as good as I originally expected.

Thing about Bend, especially downtown Bend, is that we really need the tourist business in summer and Christmas. I'm not sure a lot of stores pencil out without that business. The tourists we are getting don't seem to want to spend much money. I guess they have to have a place to stay and they have to eat, so they must be spending that money...

As I've been saying, the new books and games are covering what would have been a shortfall, and I'm thankful every day that I added them to the mix. I'm going to turn a profit, in any case, but I'd rather turn a bigger profit than a smaller profit, for some reason.

Friday, June 26, 2009

The big rodent (rockchuck) is back eating my garden. My wife had tried to block his exit from a rock pile by rolling boulders over all the holes.

"We must kill him," said my soft-hearted, sweet wife.

"Really?" I gave her a startled look.

"Well..." she says, immediately reverting back to my animal loving spouse and away from fierce protector of husband's garden. "He is just trying to make a living, I suppose."

**********

How come a toe fungus guy can afford to advertise every day in the Bulletin, and I can't?Obviously there are a lot more people with toe fungus than who buy comics.

**********

My front lawn has turned into a weed and daisy patch and my lawn mower is near kaput and out of gas and it costs a thousand bucks to hire someone to put in a new lawn and I have no days off and a rock path would also cost a thousand bucks and my neighbors are giving me the stink-eye and I'm pretending it doesn't exist.

**********

Homeless on the High Desert says he could give a "Rat's Ass" about Micheal Jackson R.I.P. I too could give a rat's ass, but I would never, ever say so out loud. Then again, I've learned never to dismiss other peoples love of pop culture icons. And, by the way, Micheal Jackson having been fifty years old just makes me feel ancient.

**********

Linda tells me that her son Todd got mad at her when he was little, and said, "I wish Farrah Fawcett was my mother!!" My wife said sadly, "To think, he would have just lost his Mom...."

**********

They go in Threes. I'm not sure if Ed McMahon is on the same level -- I suppose he is, actually.

**********

I haven't even hauled the air-conditioner out of the closet yet. Weird year.

**********

I figured it out. I need to entice the cougar that was sighted in my neck of the woods to my backyard to take care of the pesky rock chuck.

Thursday, June 25, 2009

Approaching the 4th of July weekend, I still don't know what to expect.

Usually by now, we would have seen an upsurge in tourist business. I don't think we've really seen it.

Pegasus Books is on track to my middle-case scenario, mostly because I was on track earlier in the month, and it has pretty much stayed there. Flat. Usually I would have seen a bit of a boost by now, what with the kids being out of school for over two weeks. (Not so much because of kids, but because people spring for vacation....)

Meanwhile, however, I'm pretty astounded by the foot-traffic count. I can see averaging 100 people a day in the door for the July and August period. When I last did customer counts a few years back, it was probably a third less (or more) than that. I attribute that to growth of retail around my store.

The books on the sidewalk are probably bringing in 10 or 20 extra people a day. I may only make a dollar or two off them, but I think it's really helped my book sales. I'm constantly getting the remark, "I didn't know you had books."

The biggest thing, the thing I'm most proud of, is the broad reach of the store. No one product is really carrying us now. All 8 product lines are producing. (Well, maybe not so much anime...) It makes the store very stable. Many more of the sales are to the over-twenty crowd, probably something like 90%, nowadays. Again, a relatively more predictable age-group than the old teenager/nerd/collector axis that the store used to be.

I get tons of people who once never would've stepped foot into my store actually being intrigued. "An interesting mix," the people who don't buy will say. "I love your selection," the people who do buy say.

My budget?

Well, um, you know.......err........I, ah,.......

Don't ask.

Actually, I haven't Quite Tipped Over yet, but I have used every bit of cushion I had, and the real summer hasn't really begun. I wouldn't fall into the red unless I was to fall back below my Jan and Feb levels, which isn't going to happen. That would be like getting snow in June, ....no, wait......

Anyway, I'm still optimistic. As opposed to having a certainty earlier in the summer if I'd just stuck to my budget better.

On the other hand, the store is and continues to be fully stocked. My reserves are untouched. I've actually turned a good profit in the first half of the year which almost never happens. (I spent years falling slowing into the red -- like a stretched rubber band -- from January through June, and then pulling back into the black in summer, then falling into the red in Sept. through Nov., then pulling ahead again at Christmas.) So I've managed to flip that around. Now, instead of having to constantly catch up, I have a cushion for the slow times. Which is a double improvement -- first I had to catch up, and then I had to pull ahead.

My other goal is to get through the rest of the summer without any conflict with customers. That'll be something like 6,000 people I'll be dealing with, all of whom I need to handle well, no matter what they do. Even one tenth of one percent of problems, would be too much. It's within my capacity, especially if I make it a goal.I'm getting better at it. When I first started working everyday, I wasn't quite ready to handle it, I think. As the spring has progressed I've gotten a bit better at figuring out customer behavior; so what I want to do is refine that to a 100% success rate. It'll be a day to day thing. (Either allowing certain things to happen, or being the most diplomatic I can be.)

I'm going to just focus on the store for two months. Not worry about anything else. Just go to the store, and if I crash on the couch at night, so be it...

Wednesday, June 24, 2009

Sometimes in life, it's best to shutup and lie low. Except if you are a local O.L.C.C. agent, apparently.

**********

Calling a Ponzi scheme a Ponzi scheme. I ran into these kinds of operations a lot in my early years in sports cards. It doesn't matter that these operators were so stupid they thought they could pull it off -- they were buying with customer funds, and not delivering. Try to compete against that in the short run. I would make legitimate offers for collections, only to be outbid by fly-by-nights who had no hope of ever paying. (Consignment....probably made it legal, if not ethical.) Guys would break cases, sell the easy cards enough to buy more cases, break them up and sell the easy cards, and on and on.

It never did get much better. Totally unsupervised by the card companies, who apparently had no ability (or concern) for who was running a legit business and who was just scamming.

**********

Juniper Ridge got "favorable bids." Part of me says, good for you. Part of me says it's not a bad thing to plan for decades down the road.

But the bigger part of me wants to shout: The only reason Juniper Ridge got such favorable bids is because they're the only idiots still building!!!

**********

Speaking of Ponzi schemes. The thread running through a lot of these cases is intent. These people didn't have the 'intent' to run a Ponzi scheme, just as people who get hooked into pyramid schemes often don't know what they're getting into.

"Sawyers to Consider Settlement in Trust Suit." Todays Bulletin.

Gee, that's good of them.

Here's the killer quote to me, from Tami Sawyer:

"This has been such a mess," she said. "We don't understand what we're being sued for...Right now, it's hard to make this decision (about the settlement) because we don't have a clue. We don't understand any of it."

I totally believe her. The cry of a petulant child, who had just enough drive and energy to take from others, but no inner willingness to share.

**********

"Gaga for Gadgets" Real men go camping with a Swiss army knife and two matches...

Tuesday, June 23, 2009

I mean, the sub-title of this article could have been: "We're all Walmart now. Except with better brands!"

The reporter didn't ask any of the hard questions.

How are you going to make luxury goods cheaper?

Are kiosk machines an improvement? (Not to me, they aren't.)

How are you going to provide more service without more service people? Or better service people by paying them better?

How is providing less types of product, and less of each product, an improvement?

If confusion was a problem, why is it only be addressed now? Is that a real problem?

And so on.

There's a real "Back to the Future" vibe to the whole thing.

I can just imagine the brain-trust at Sears:

"Why are we carrying so much product, when we can keep them at a centralized location and let people order from afar?

"Hey, boss. I got an idea. We'll put out a paper thingie that shows all the possible product we might carry, and send it direct to the households. Then we don't have to pay all the overhead of having actual people selling actual product at actual locations...

I saw the N.Y. Times article below in the Bulletin the other day, and almost commented on it then. Today, it was on the KeyPoint Partners Retail Roundup, allowing me to cut and paste, so here's what I think:

It's a bunch of self-serving tripe. Hogwash. And if you believe it, you're a sheeple, just like they think you are....

It's Recession Marketing at it's most obvious.

"Hammered by the recession, some of the nation’s biggest retailers are seizing the moment to reinvent their business strategies. And the impact will mean both sweeping changes in the merchandise on their shelves and subtler alterations, like how many pantyhose to keep in stock."

Sounds good, right? They're using the recession to improve themselves.

First improvement?

"The likes of Sears and J. C. Penney will put self-service computers in stores so customers can browse collections or buy out-of-stock items."

Interpretation?

We won't be carrying what you want anymore, nor will we have enough employees to help you find what you want. So we'll stick this machine in the store and let you search, and pretend we can get it for you...."

Second improvement?

"....retailers of all stripes will offer more exclusive merchandise...."

Interpretation?

We'll make deals with suppliers to get our product cheaper and since no one else will be carrying it, we can charge whatever we want without fear of contradiction. Like Walmart, we'll demand changes to get the price-point down.

Third improvement?

"At high-end stores, the era of ever-escalating prices on luxury goods appears to be over. In the future, consumers will still be able to buy chic brand names, but at a wider range of prices.

“Our customer loves our brands,” said Stephen I. Sadove, chairman and chief executive of Saks. “They don’t want to trade down to lower brands. But they want more of a range in price within the brands that they love.”

Interpretation?

We're going to water down the brands. How do we do that exactly?We use the same brand, but the contents will necessarily be of lesser quality and quantity. Because, you know, it's the brand that counts...

i.e. = “....we’re working with the designers to try and ease a portion of their collections into a new price range.”

Fourth improvement?

"Another change is that consumers will have fewer brands from which to choose. Wal-Mart, Target, Home Depot, and PetSmart are just a few of the chains winnowing their brands. As Home Depot’s executive vice president for merchandising, Craig Menear, put it: consumers are “time-starved” and “looking for simplification in the entire shopping experience.”

Interpretation?

Do I need interpret this for you? We're going to carry less product, because we don't want to confuse you poor sheeple. IT'S FOR YOUR OWN GOOD!

Even the reporter partly saw through this idiotic reasoning:

"That may delight minimalists, because it will be easier to find items on the shelves. But it also limits choice.

Another potential drawback for consumers is that stores may run out of stock more quickly than in the past because, as Mr. Lundgren of Macy’s explained, “retailers learned that you can’t get out of the merchandise that you ordered months before.”

Final Improvement?

"....retailers of all stripes will offer..." "... more attentive customer service.

One of the biggest changes consumers are likely to see is greater personalization."

Interpretation:

How are they going to do this? Through mechanization and online services. Again, the reporter seems to dimly perceive there might be a contradiction here.

"Despite all the new technology, consumers will be getting more attention from sales staff."

Throughout the article is the implication that mass market retailers are going to refocus on personal attention and service.

And they are going to do this how? By hiring more employees and paying them better? Training them better? Exactly how is that going to happen?

For some reason I haven't heard a surge of hiring or pay raises going on in the mass market world, but I'm sure the employees they have will be willing to work twice as hard to for same pay....

So, in summary, they're asking you to believe that they are going to be providing better service by cutting employee hours, laying employees off, replacing them with machines, carrying less product, lowering the price on luxury goods through re-engineering, closing outlets, and telling you over and over again, you're better off.

**********

New York Times, Business section. Stephanie Rosenbloom, June 19, 2009.

In Recession, Strategy Shifts for Big Chains

Hammered by the recession, some of the nation’s biggest retailers are seizing the moment to reinvent their business strategies. And the impact will mean both sweeping changes in the merchandise on their shelves and subtler alterations, like how many pantyhose to keep in stock.

High-end stores like Neiman Marcus, Saks and Coach will offer more midpriced merchandise. Many chains, including Wal-Mart, will carry less inventory and fewer brands. The likes of Sears and J. C. Penney will put self-service computers in stores so customers can browse collections or buy out-of-stock items. And retailers of all stripes will offer more exclusive merchandise and more attentive customer service.

One of the biggest changes consumers are likely to see is greater personalization and regionalization of merchandise.

An initiative known as “My Macy’s” requires the retailer’s merchandisers and other planners to go into stores each week to learn from the sales staff — who keep logs at the cash registers — what shoppers are requesting, snapping up or complaining about.

For instance, when strapless and bare-shouldered dresses were selling well everywhere except Salt Lake City and Pittsburgh, Macy’s employees in those stores knew the problem was that their customers wanted more modest dresses. So they passed that information on to the merchandisers. Out went the strapless dresses; in came dresses with cap sleeves. And sales went from lackluster to robust.

Under the new system it will not be unusual for a local Macy’s to stock the merchandise customers request, be it wide-width shoes or Sean John suits, and for those offerings to be different from the ones in a Macy’s store 100 miles away.

“I think what Macy’s is embarking on is perhaps the largest transformation in our company in a couple of decades,” said Terry J. Lundgren, president and chief executive.

The Macy’s change is just one example of a wide range of initiatives retailers are pursuing as they struggle to cope with an economy where sales are lower than they were just a few years ago.

At high-end stores, the era of ever-escalating prices on luxury goods appears to be over. In the future, consumers will still be able to buy chic brand names, but at a wider range of prices.

“Our customer loves our brands,” said Stephen I. Sadove, chairman and chief executive of Saks. “They don’t want to trade down to lower brands. But they want more of a range in price within the brands that they love.”

And that is what retailers intend to give them. Burton M. Tansky, president and chief executive of Neiman Marcus Group, told investors on a conference call last week that “we’re working with the designers to try and ease a portion of their collections into a new price range.”

Prices will also be lower at some “affordable luxury” chains, like Coach, which is increasing the proportion of handbags it sells for less than $300. About 50 percent of the company’s handbags will cost $200 to $300, in contrast to about 30 percent of handbags last year.

Another change is that consumers will have fewer brands from which to choose. Wal-Mart, Target, Home Depot, and PetSmart are just a few of the chains winnowing their brands. As Home Depot’s executive vice president for merchandising, Craig Menear, put it: consumers are “time-starved” and “looking for simplification in the entire shopping experience.”

That may delight minimalists, because it will be easier to find items on the shelves. But it also limits choice.

Another potential drawback for consumers is that stores may run out of stock more quickly than in the past because, as Mr. Lundgren of Macy’s explained, “retailers learned that you can’t get out of the merchandise that you ordered months before.”

“Instead,” he said, “you’re more likely to see retailers ordering fewer of each individual size and taking that risk that they’ll sell out and not capture every sale, rather than the risk of having too much inventory left over to mark down.”

Another trend is on the horizon: seasonal transitions for apparel will probably have shorter lead times. With strapped consumers buying only what they need when they need it, it has occurred to retailers that selling swimsuits to New Yorkers in early March is not necessarily a winning strategy. And so chains are beginning to work with suppliers to shorten the time between ordering and delivering merchandise.

Consumers will also see even more of the exclusive collaborations between retailers and prominent designers that are so prevalent today. That will help distinguish stores as well as avoid price wars because the same items will not be sold at multiple chains.

Yet another change will be the obliteration of any remaining divide between online and in-store shopping.

In Sears stores, “appliance research centers” with computers are enabling customers to compare local competitors’ prices. (If Sears does not offer the best price, it will match the lowest offer and hand over 10 percent of the difference.) Four J. C. Penney stores in Dallas are testing “FindMore” machines the size of arcade games, letting customers see every item J. C. Penney sells and find out if the item they want is in the store or online.

Shopping by cellphone will also become widespread.

“Everything we are developing is with a mind-set that it’s going to be running on a handset,” said J. C. Penney’s chief information officer, Thomas M. Nealon.

Despite all the new technology, consumers will be getting more attention from sales staff. During the last few years, retailers did not have to work hard to separate consumers from their dollars.

But those days are over. More middle-market chains are striving for Nordstrom-quality service to win customers. Even Home Depot has adopted its “most extensive customer service training ever,” its chairman and chief executive, Frank Blake, told investors and retailing analysts last week.

Of course, luxury chains have always featured a high level of attentiveness. But the chains say that in this economy, customers have heightened expectations. Saks, for one, has invested tens of millions of dollars in the last year on software that provides its sales staff easy access to information about client purchases and preferences, so that a returning customer might be greeted by a sales representative who recalls the shopper’s suit size and penchant for Christian Louboutin heels.

Economists and analysts forecast that it will take up to 10 years to return to 2007 levels of consumer spending — which makes now a good time for retailers to re-imagine the future. Paul A. Laudicina, chairman and managing officer of A. T. Kearney, the management consulting firm, noted that major consumer innovations like Neoprene and Teflon came out of the Depression.

Mr. Lundgren pointed out that if consumers were still throwing money around, stores might not want to alter strategies that were still working.

But with today’s recession, he said, “now is the time to aggressively rock the boat.”

Monday, June 22, 2009

First of all, I'm pretty done in this morning. Really tired. It's people who wear me out, and I had a ton of them in on Saturday and Sunday. The dollars per-customer average was very low on Saturday, a little better on Sunday.

But....I'm not going to complain about sales.

Funny thing, people were actually a little more thoughtful than usual about putting stuff back in the right place and keeping things orderly. Linda came down and joined me, so that was really fun, seeing old friends come into the store who were surprised to see the two of us together in one place...

All in all, the Bite of Bend probably added business, especially on Sunday, which have been pretty slow lately.

As I was driving home on Saturday, I was looking at some of the very quiet stripmalls and thinking, "They'd kill for the kind of crowd I was experiencing."

I'm also pretty much going along with these things nowawdays, and trying not to be too cantankerous about it.

My position now is -- downtown Bend is thriving, and closing the streets on the peak weekends is problematic. I have no problem at all with doing these events in the off season. Still, with the addition of books, I'm no longer completely left out of the festivities. (I know I'll get raised eyebrows at 'thriving', but at least for the months of summer and Christmas, and at least for now with the mostly filled storefronts, and -- if you will -- compared to elsewhere, I don't think it's a completely inappropriate word....)

I had a couple of out-of-town groups buy big batches of toys, so that helped me over the top yesterday.

A couple of interesting notes: some of my neighbors were closed yesterday. What does that say about their opinion of the value of these crowds? Especially since I know some of these merchants are supporters of these events. Seems kind of strange. Watch. The same thing will happen on the 4th of July, with thousands of people downtown. (And I may join them in closing, but it's Saturday, dammit!)

Secondly, just for fun, I picked a spot in front of my store and counted people walking by. In the first hundred people, I saw 2 shopping bags. I thought that seemed low, so I counted out another hundred people, and this time saw 1 shopping bag.

Sunday, June 21, 2009

Let's see. They get 30,000 people to show up, but they're desperate for more spectators.

Hey, guys. That a full 15% of the entire population of Central Oregon! What were you expecting? What was the percentage of the population of Portland that showed up when they had the tournament? Let's see, at least a million folk within half an hour of them, would be 150,000 visitors. 2 million, within an hour of them, if you really want to get down to it, so 300,000 visitors.

Actually 15% seems really good to me, since you'd have to kill me, drag my rotting corpse to the side of the golf course, turn my dulled eyes toward the action, and shoot electric bolts into my head, to get me to watch golf.

So, another example of someone just not doing the math. Someone wanting Bend to be something it isn't -- someplace that isn't rural.

Sponsors? Let's see, you need some mid-sized regional or statewide players, someone like Jen-Weld. Oh, wait. You got them. O.K. There's.....um, there is.....ah.....oh, yeah, Les Schwab. No -- they have their own boondoggle they're having trouble filling, the Amphitheater. They're busy turning into the Walmart of tires, getting all their supplies from China.

Who else?

Oh....that's right.

There aren't any.

Those are the kinds of businesses that Bend wants to attract. Despite a sub-par airport, no interstate, a four year college that is a two year college with two years added on, and....

Well, ....you know, job producing type businesses. First we have to have them, then they can sponsor a national golf tournament. But as usual, we have the national golf tournament because we want to attract those type of businesses?

I think I'll open a branch of my store in Brothers.....then Tumalo....tomorrow the world!

There I was yesterday, Custer at Little Big Horn, surrounded by circling hordes.

I had 210 people come in yesterday. Which is a lot of people, let me tell you. I figure, about one person every 2 minutes, and if they stay 10 minutes each, about 5 people in the store at all times.

But of course, it was more like 20 people at times, and 3 people at others.

Sales wise, the per average customer was pretty low, about the same as it's been over the last couple of weeks. If I'm hoping anything will change in July and August, it's that per customer sales average.

Anyway, since I realized I was in for it, I just tried to relax. I think I managed pretty well. Didn't lose my temper once, chatted with most everyone. About halfway through the day, I cranked up my new Elvis Costello album (has a nice country rock twang to it) and tried to tune everyone out for a half hour.

Hell, I even had a chicken wrap from the booth in front of my store. I won't give them a free ad, because I'm somewhat irked at how they drew a curtain across my store, making it impossible to see my storefront from more than five feet away....

But I must say, I was pretty amazed by the size of the crowds.

I just barely made my nut, because of the sheer number of people but the low per customer rate.

Saturday, June 20, 2009

By now, some of you have probably asked yourself -- "What's with this Duncan, fellow? Can't he shut up? I can't keep up with his blathering."

Thing is, I like to write.

The following isn't meant to be egotistical. But it does explain why I write so much.

Growing up in Bend, I don't remember 'creative writing' as being part of the curriculum. I can count on one hand the number of times I was asked to write something creatively. Maybe there were other incidences, but I don't remember them.

In the fifth grade, I wrote a story about Snoopy and the Red Baron that was a huge hit with my classmates and my teacher. I mean, I was a rock star for about a week. At the end of the school year, my teacher singled me out to read it again in front of the class. For reasons I don't now remember, I was disgruntled and mumbled my way through the reading. I'll always remember the leaden response from my teacher and classmates.It taught me that, if put in that postion, I at least need to try.

Then in the seventh grade I had an art teacher who assigned a clipped out picture from Life Magazine to each student, and asked them to write a story about it. Mine was a picture of the red rock bridge monument in the Southwest. As I went to sleep, my brain started churning out this tremendously emotional story of life and love and death and meeting under the bridge that was epic in scope. Epic, I tell you!

I woke up the next morning and dished out something else, got my usual A or B grade, and forgot about it. Well, not completely, because that creative urge that set in that night lingered. What if I had actually written it?

Then as a sophomore in high school, in a business class of all things, we had a guest speaker. It was a radio ad guy, who is sort of really well known in this area (I still hear his voice on local T.V. and radio.). He asked us if we wanted to try to create a 60 second ad, and gave us the particulars. I seem to remember it being a V.W. ad. Anyway, I wrote something out and that was that.

A few days later, he came up to me after class and asked if I was Duncan McGeary, and would I mind if he used my ad copy in a radio ad. I was a bit surprised, but said, sure why not?

And sure enough, there it was on radio shortly thereafter.

All these were small signs that I liked to write. I'd get idle comments from teachers, like "You have a facile ability with words which you need to discipline." And I'd usually get that moment in college when the professor who had ignored me up that moment would seek eye contact with me after I'd written my first paper and seem to be saying, "I'm on to you. I know who you are now." I even had a teacher say that outloud in class in front of everyone, embarrassing me. "Duncan knows this, but Duncan won't say. Duncan knows more than he's letting on...."

Just before going off to college the second time (I flubbed the first time) I had another one of those brainstorms. I loved Lord of the Rings, and nothing like LOTR's had been written up to that point, and I wanted to write something like it. My family was dubious, my mother was worried. I heard a lot of "You should be realistic." Only my friend Wes encouraged me, for which I'm eternally grateful.

I was stuck, though, on how to get started. Finally, I said to myself, "Just write a story. A story you would like."

Two sleepless nights later, I had STAR AXE pretty much mapped out. It took me another five years of flailing around trying to write it, but I finally got it put together and sent off. (By which time there were innumerable LOTR pastiches, sigh.)

It completely surprised me when it was accepted by not one, but two publishers. The money wasn't as much as I thought, but it was a beginning. I immediately wrote the next novel, and got it accepted, and then started the third.

Eventually, I wrote 7 novels, and the sixth and seventh I felt were the best. But in the meantime, I ran up against the reality of the business of publishing. Sending books off into the VOID and not hearing anything for years at a time.

So when I bought the store and was immediately rewarded for my creative efforts, writing took a back seat. I intended to start writing again, someday.

Blogging has become that writing...

I figure about 3 or 4 novels worth of words.

But with immediate gratification of seeing it out in the world that very minute.

Ready or not, I think Bend is going to become the poster child of excess to the mainstream media.

I suspect that the New York Times article on Bend is only the beginning. For one thing, as the rest of the country is trying to crawl their way out of the hole, Bend will still be digging. As much of the country lies panting in the mud, Bend will be still be slinging dirt.

Like it or not, we're it.

It was interesting to look up "Poverty with a View" in the Urban Dictionary and find that it is applied specifically to Bend. I sort of thought every resort community had that saying.

We'll be in the top ten lists for a long time. Over priced, under employed, and out of luck.

The rest of the country needs someplace that was worse than themselves. They need someone to wag their fingers at. Wow, we have it bad, but at least we're not Detroit or Bend, Oregon!!

Bend has beautiful surroundings, they'll say, but look what they did to themselves. It's a shame.

Our very picturesque-ness is going to be what puts us on the poster. Look! they'll say. See what happens when you build too much. When you drive too much. When you think you're special. When you don't create jobs!

Media will shake their collective heads. Sad, isn't it?

Whatever you do, don't get Bendized. (Damn Californians, mutter, mutter....well, you know how the rest of the country shakes their head about THOSE people.)

Just saying, be prepared to be kicked around for awhile. You'll get concerned calls from relatives. "Are you O.K.? We hear Bend is a ghost town!"

Friday, June 19, 2009

A couple of recent stories that make me wonder if people understand that while all Mom and Pop businesses are small businesses -- not all small businesses are Mom and Pop.

A Mom and Pop, almost by definition, provides an income for Mom and Pop, and perhaps a part-timer for breaks. That's the SCALE of the business. In theory, at least. I tend to think that just as there are fewer single income middle class families, there are fewer M & P's that provide more than one income.

Certainly, there isn't enough income in a business that usually has just one floor person at a time to provide for a full-time manager and extra employees -- and have anything left over for M & P.

So the scale has to get bigger. A store that needs more than one floor person at a time, or second and third locations. All that does is ups the ante and risk and work, and often doesn't produce any more income after the employees are paid.

I had four stores once, and found that while it provided me with longer vacations, it also turned out I didn't have the resources, the technical support and systems, and ultimately, the management skills to pull it off.

Anyway, as charming as the story in the Source about Recession Pies was, it was pretty amazing to read that they thought that little cart would provide income for not one, not two, but three full-time owners.

The other real eye-opening article was the "New Credit Card Limits are a Blow to Small Businesses," in the Bulletin Business section.

"As of April, 59% of America's small firms relied on credit cards to help finance their day to day operations..."

O.K. I can understand using credit cards for expansions or emergencies or seasonal buying, but "day to day operations"??!!

Again, I suspect the SCALE of the businesses are out of whack. You grow at the pace at which you can grow, and you pay for it as you go along. I pretty much try to pay for everything within my cash flow. If I use my credit card, it's as a tool, utilizing the money toward the beginning of a buying period, giving me easier access to online product, and so on.

But I pay it back every month. At least for the "day to day" part. Sometimes I might borrow a bit more to expand, and I can conceive of borrowing more for emergencies, but in both cases I would be paying it down each and every month until it was gone.

But if I had to rely on credit cards for "day to day" I'd know there was something wrong.

Back about 10 years ago, when I went to Consumer Credit Counseling, I had to cut up my credit cards. Since I had almost no resources in the bank, I had to be extremely savvy with my cash flow. It taught me how to manage the "day to day" expenses -- though I must admit, I miscalculated often enough that Western Bank made a fortune off of me for over-draft fees. So that when WaMu cut me off from that, they did me a favor.

Nowadays, I'm very strict with my credit cards. And I try to keep just enough cash in the bank to cover the cash-flow. That isn't a humongous amount of money, really. Because the small scale of my M & P, the cash flow needed is of a similar scale.

All that borrowing from credit cards for "day to day" expenses tells me is the proportions are out of whack. Because day to day sales should cover day to day expenses.

Thursday, June 18, 2009

I was getting worried. It seemed there for awhile that everyone was as negative or even more negative than I was about the business climate in Bend. I've talked to out-of-towners who seemed to believe that downtown Bend is desolate, boarded up. And, of course, it's amazingly busy with new stores popping up everywhere. (How everyone is actually doing -- as I always point out -- may be something else entirely.) Stores keep a'comin'.

But, now, with the seasonal uptick, that has changed. People are getting all excited like, and thinking we're back! I find myself once again -- I won't say more negative, I'll say -- less positive than most people I talk to. That makes me feel a little more secure, somehow.

I think we're still in the slobbering, muggy, muddling part of the low middle range. (Sorry to use so many technical terms.) For instance, June has shown no real strength, and it's almost over. Even if July and August pick up, we're already too far in to make up for it.

So...after that, we're into the Fall season, then Christmas, then the long slow slog to summer, again.

Foreclosure and short sales, all around. I was talking to a developer who said that all those bids for short sale houses are for show. That the people making the bids are more or less being strung along, so that the bank can establish a low value and take back the house themselves.

Which goes along with what I've read nationally that the banks don't actually want to relinquish their 'toxic' assets, because they still think they can make money from them.

All they have to do is wait it out. Not make any loans and stay solvent.

Not sure that was the intention of the 'bail-out.'

Positive attitude can only take us so far. If real time foreclosures and alt-loan adjustments are there to hammer us down again. No building, to speak of. It is pretty much survival time. Breaking even will be an achievement.

A few small trends, I don't know how significant they are. It's anecdotal, and I just believe it's happening but can't prove it.

The first trend actually is documented, but I don't know how long running it will be.

1.) Lots of people and lots of small sales. But not very many big sales. I'm not seeing what I would consider the "Hey, we're on vacation, let's buy it" crowd yet. It's still early and they may show up.

2.) More cash transactions. Seems like people aren't whipping out their card quite as much. I noticed on one day that I didn't get a single purchase with a card until late in the afternoon. But that may have been a fluke.

3.) People coming into the store who are telling me that they are either moved to Bend, or are planning to move to Bend. Some have even bought a house. Then again, if someone has left town, I guess they wouldn't be around to tell me. I saw the biggest exodus over the winter, and the shelves seem to have stabilized.

4.) People seem to think the economy is getting better. I don't think it is, other than seasonal variation. I think what we're seeing right now is what we'll see for at least one more year, and probably two. Sure, the severe decline has slowed, but I think 'green shoots' is overstating it.

5.) Nevertheless, the middle management people, the people between the actual small business, and the media on either end, seem to think things are getting better. They even reassure me it's getting better. Why? Because the media is saying it, and because their clients -- the stores -- aren't telling them it's Armageddon anymore. But....stasis is not exactly the same thing as 'turning around.'

My sister Sue and her family are in town, and we went to Staccato's last night. Now This is a once a year event, for Linda and me, if that. I know, I always talk about how we're not foodies, but, man, oh man, we sure enjoy the meals when we get them.

Halfway through the meal, my nephew dumped an entire glass of iced soda in my lap. So I'm hooping and hollering and laughing until I notice the Nicholas is mortified. I spend the next ten minutes trying to mollify him, hey, Nick, don't worry about it ! You know accidents happen! It will seem funny later!

Nothing worked until I took some of the ice and stuffed it down the back of his shirt. Looked up to see both Sue and Claus beaming, and giving me the thumbs up.

"This isn't the end of it, kiddoe," I said. "Someday -- someday when you have forgotten this, and you are least expecting it -- I'm going to GET you."

As we left, I pointed my finger at him again. "Someday, buster.....watchout."

Anyway, for only the second time since Christmas, I drank some beer. 3 Mirror Pond Ales. Came home and laid on the bed at 9:00 at night, and was out.....

Wednesday, June 17, 2009

My monthly statistics were looking kinda strange, so I dug up my records from 2006 to compare.

In May, 2006, games and new books represented 7% of my sales.

In May, 2009, games and new books represented 27% of my sales.

In other words, without those two product lines, I'd be having trouble.

SHOULD I OR SHOULDN'T I?

I wondered at the time if I was doing the right thing by bringing in new product lines when I knew the economy could go south at any time. I wondered if I had the room. I wondered if I had the energy. I wondered if it would defuse the focus of the store too much.

I'd ask my wife, "Am I going too far? The store is packed! Should I add even more?"

Her answer was, "It's what you always do." Which was either reassuring or a warning.

AN OPPORTUNE MOMENT IN TIME.

But I saw an opportunity, as well. Gambit Games was leaving, and the Book Barn showed every sign of getting ready to leave. I knew I was getting requests for books that almost never showed up used. I thought that the Euro-Boardgames were catching on.

I was going to be standing alone for awhile, at least, with Anime Mt. gone, and American Sports gone, and Fun and Games, and so on....

CASH OR PRODUCT

The choice at the time was to stand pat and save the cash.

Or to roll the dice one more time and see if I couldn't establish a new revenue stream or two.

I thought at the beginning of 2007 that I would have a year or two before the economy would crash, or that I would get plenty of warning. Business was still good, so I took the plunge and started buying new books and boardgames. That continued until about mid-August, when the whole Bear Stearns fiasco kicked off the economy collapse.

ANOTHER MOMENT OF CHOICE.

It was clear to me that the economic slide I'd been blogging about for about 8 months at the time, had begun. But the dropoff was relatively small at first, and continued at a relatively moderate pace for the next year -- about a 10% decline.

I'd seen enough strength in the boardgames and books to want to continue. Sometimes a little bullheadedly. I picked every moment to reinvest.

THE REAL CRASH.

In September of 2008, the real crash started. Sales took another dip. I was still not quite sure whether I should continue, but I had Christmas ahead of me and I went forward. By about January, I was mostly there. I made one more big huge book order, and I've been maintaining ever since.

THE RESULTS.

As I mentioned above, these product lines, which are paid for, now represent 27% of my sales. What's more, they are still showing growth at a time when all the established lines are sliding.

I figure that if I'd just save up the cash I spent on the product, instead of reinvesting, that I would've used up that reserve by the end of this year. And I'd be stuck.

Instead, the two extra product lines have made my store cash-flow viable when I most need it. I've gotten new competition in books and games, comics are in a transition phase again (aren't they always?), I don't have any heavy sport card collectors right now, toys are hit or miss, and so on.

Books have been especially valuable with the foot traffic. I got 84 people in yesterday, on a Tuesday, my slowest day of the week. Most of them were interested in books, which accounted for about 45% of my sales.

TROTTING OUT THE OLD CLICHE.

If you'll pardon my trotting out the old cliche -- "Give a man a fish, and you feed him for a day. Teach a man to fish, and you have fed him for a lifetime."

Tuesday, June 16, 2009

It's funny that people think most small business blogs are too negative about the economy. If anything, it's the opposite.

1.) People who are doing well, tend to talk about it.

2.) People who are doing well, who have a bad month, are unlikely to talk about it.

3.) People who are doing poorly, tend not to talk about it. Or to hide it.

4.) People who are doing really, really poorly -- have quit.

I've been reading my Comic Retailers Bulletin Board over the last few months, wondering why everyone else was doing so well with comics when my own sales were down. Today's news is that comic sales were down 19% in May, and that only one comic broke the 90k sales barrier, and for the second time in comic history, no comics broke the 100k figure.

But you'd never know it from the Comic Retailers Bulletin Board, which consists of the savviest, most technologically adept members of our community. There is a definite success bias, which you have to watch out for. Not to mention, these guys sell dozens and sometimes hundreds of units when I often sell a few or one or none.

There are ways even amongst the 'objective' measuring standards to fudge. For instance, Marvel and DC might do a promotion that gives you a huge discount for ordering more copies. So what shows up on the charts are high ordering numbers, but the companies probably made little or no profits.

So whenever you think the economic news is bad, and that everyone is just being oh, so negative, think about this.

Monday, June 15, 2009

"What do you have to say? Not someone else. Not referring to another site. You. Not everyone else. Or do you have anything to say? Sheesh..."

I was going to go on, but twittering isn't an argumentative format? (Though why not? Seems perfect for that. Everyone has to be concise and can't dominate through sheer volume.)

But, no. Twittering is happy talk.

Thing is, what everyone else slams Twitter for, I actually like. Mundane topics, like having lunch at such and such a place, or my kid just threw up, or my husband is looking for a job, just got back from the Beatles singalong and it was packed....

Real like. What is happening to you and to your community?

It's all so unfocused. Look, I know there is this thing called the world wide intertube net, or ethernet or something....and it's full of pictures of cute cats and dogs. I know, because I get these e-mails with links to them.

But I don't care about that stuff. I want to know about YOU. You and your family and friends, and what's going on in Bend, or in the country. Links lose their effectiveness if you link every little thing that comes along. Save it up.

And there is the spam. Links to spam. You see, I can't know the difference until I click, and there is the frikken spam, and I go away from Twittering for a couple of weeks, and come back and find it worse than ever....

It reminds me of the Monty Python twit race; They're Off! Contestants going in every direction! Tripping over lines in the track! Getting up and going in the opposite direction!

I've never been a great believer in storewide "SALES!" I don't seem to have the knack. Just like I'm not very good with auctions or conventions or signings or any other form of special event selling.

I lay out the best selection of merchandise I can afford in as attractive and accessible a way as I can manage in a small space and learn what I can learn about each product and hope for the best.

What I do do, (Do Do?), is offer individual discounts for individual product to individual individuals (individual individuals?).

Sometimes I get an item for a really good price, and I'll order extras. Sometimes a customer expresses interest in an item I've had in the store for way too long. So I immediately offer a 'deal.'

Thing is, it's a real deal, not a phony deal. I'm really giving them a good price on something they seem interested in.

Lately, that just hasn't been working. Someone seems really interested in something, I offer a hefty discount -- and they put it back!! ??

I've also noticed that people are marching in off the street with the 1.00 and .50 books, and almost flinch when I start to tell them about my regular used books. Hey, the reason I'm selling these books so cheap is to get you in the door and show you what I have......

Can't they listen to a 30 second spiel (?) that consists of: "Just to let you know. We carry regular used books over in the front of the store on the other side, which we sell for half-cover price on paperbacks and one-third cover price on hardcovers...."

"What! This isn't .50!! ??"

After I reassure them, they pay and immediately leave, hunched over, looking neither right or left.

Much good it does me.

Anyway, I've decided that people are just suspicious and resistant to "SALES!" because they are being besieged by them, even more than usual.

Ironically, it just means I'll not be making the offers, because they seem counter-productive. Not offering a deal works better than offering a deal. It's just human nature -- if I'm offering a deal, there must be something wrong with it.

Which is weird, because the real question should be, is the customer interested? And if he is, then a lower price would seem better than a higher price, what?

Sunday, June 14, 2009

It's amazing how often people want what doesn't exist and don't want what does exist.

I've mentioned before, parents who are looking for comics and haven't bought one in 30 or 40 years will almost wholesale reject the current offerings. They want what they remember. Whether that ever even existed is debatable (comics from 30 or 40 years ago are clunky and dull compared the the art and writing today), they have a rosy memory.

Comics were on newsprint. They had big splashy panels that said, "BOOM! and POW! and CRUNCH!". They had dialogue like "Holy Metal, Batman!" They cost .25 cents.

When confronted with a comic vision of even 20 years ago, such as the Watchmen, they recoil in bewilderment.

Here's the problem. Current comic readers would reject the old style wholesale. I've had this store long enough to remember how pathetic the Jack Kirby comics sold near the end of his life, and how Stan Lee is indulged occasionally with a new story, while everyone mutters under their breath how his writing 'isn't what it used to be.'

Jack Kirby and Stan Lee are Gods. Gods who no one wants to read, anymore.

Who are you going to make comics for? The people currently reading, or the huge 'potential' audience who probably will never buy a comic?

Believe me, they've tried. Over and over again. Lowering prices. Going to newsprint. Being purposely retro.

That HUGE potential audience is quite the temptation.

But it never seems to work.

It's really a false choice. There are available books which are in the old style, there are even monthly comics that come very close. The real problem is that the old audience won't really allow for any variation from what they remember -- and frankly, that's impossible. Their memory is as a 12 year old, and they are now 42 and even the same comics wouldn't do what they want it to do.

There are several truly brilliant comics that recreate the 'feel' of the old comics, but told much better and with much better art. Astro City, for one. Tom Strong, is another. Even the more recent All-Star Superman. They never quite make it with the new audience -- and have zero effect on the old 'audience.'

A few specific examples: The original Teenage Mutant Ninja Turtles were pretty crude black and white stories. What people mostly remember was refined by the professionals who did the cartoons. Show an old TMNT fan an original comic, and they'll say, "That isn't it."

But it is. It's exactly what it was. It isn't what they thought it was.

Or Elfquest. Anyone who remembers this comic remembers the old 20.00 color albums. Which haven't existed for 20 years. I can show them the 9.99 'manga style' books, or the 50.00 small color hardcovers, all day long. "Why don't you have the old books?"

Because they don't exist. Except for big bucks on E-Bay.

Or the old Walt Disney Comics and Stories and Uncle Scrooge. Actually, these are exactly what they would remember. In fact, they're better.

Carl Barks is a bloody genius. You can mention the old stories of Uncle Scrooge traveling up the Amazon in search of gold with Donald and his three nephews, Huey, Dewey and Louie; or going to the Klondike; or searching for El Dorado in the American Southwest, and people will get a fond smile on their face.

Tell them that they can actually buy the same stories, RIGHT NOW, and that they are even better than they remember. That they are of the same quality as the movie UP! or Toy Story.

I've taken to posting the Central Oregon building permits every time the Bulletin has them, because this, to me, is one of the most important statistics out there. It shows a 53% decline from last year, and so far this year, a 59% percent decline. This .... going into the heart of the building season.

Bend went from 22 permits to 17, which is basically the difference between awful and terrible, or something. Both numbers reflect a stagnant building economy.

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Meanwhile, McClatchy Online has another one of those great interactive maps that projects that Central Oregon won't return to 'prerecession' employment levels until 2014. Five years from now.

It also arrives at a figure of 13,500 unemployed persons in Bend with the 15.6 unemployment rate. (In addition to all the contract workers in Bend which is probably higher than most places.)

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BB2 picked up on Bob Thomas's comment that "Bend is in a Depression." When Paul-doh said a couple days ago, he had picked up his headline from Thomas's testimony, I looked for likely phrases and came up with these:

I don't normally comment on other stores by name, but the Bulletin has a John Stearns column about a couple of new or expanding furniture stores in Bend. The column points out that 7 furniture stores have closed or are closing.

In essence, both of these owners are certain that they will do well when everyone else is struggling. Both point to the 'high-end' niche.

I hope they're right. I certainly understand the need to push forward, because I often feel compelled to do the same. Not going down quietly, but actually upping the ante is sometimes the right thing to do.

So I'll just remind you of the information above:

17 building permits in Bend in May.

"Bend is in a Depression!"

13,500 unemployed, 15.6% unemployment, projected 2014 recovery.

7 furniture stores closing.

If ever there was a time to hunker down....

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Finally, a little shout out to H.Bruce Miller. I hope you're on vacation and enjoying yourself. I've been missing your contributions to Wandering Eye and your comments on the other blogs.

Saturday, June 13, 2009

After a terrifically busy first six days of the month, I had a terrifically crappy next 6 days of the month (literally dropped in half in sales), for a terrifically average 12 day total. Still on track for my 'middle' case scenario, but can't help but be a little disappointed.

Blaming weather is lame -- weather always happens. Still, the last few days have been pretty barren once the storms started. Looking at the forecast, seems these storms are still a'comin'.

Oh, well. I've become reconciled to summer business not really starting until the second half of June. They keep the kids in school until pretty late, followed by what I think of as a transition week, where schedules change, camps get started, activities are begun, kids are traded amongst the families.

So, with any luck, the weather will turn more summery just as the new routines are established.

Meanwhile, I've apologized to my UPS guy for the huge loads of products that will be coming in. Told him he might want to take his vacation. I'll be busy for the next few weeks just trying to make room for everything. It's lots of fun -- kind of like a birthday party -- opening up the boxes and seeing what I got.

Then I'll be into July. Like I aways say about Christmas, they haven't yet canceled it. Nor have they ever canceled summer. There will be an increase in business, even if it's down from last year.

I can't help my optimistic streak. I always think the worst is over, that we're going to turn the corner, we're on our way. But reality and logic tell me different. I'm sticking to my prediction that -- even when the rest of the country starts to recover -- Bend is going to be stuck for a couple more years.

Friday, June 12, 2009

In the last two days, I fell off the spending wagon bigtime. I woke up in the gutter with invoices plastered all over me. A hazy memory of hitting the keystrokes and hovering over the commit button. What harm ordering a few items?

Hi, My name is Duncan. And I'm a Spendaholic.

I've been invoice free for one day.....

I don't want to talk about it.

Moan. Sigh......

Thing is, I've been keeping you up to to date until now, so I'm going to keep on doing it.

First of all, it isn't a huge disaster, unless the economy tanks again. What I essentially did was spend my reserve. It takes the sales level I need to make to turn a good profit from the 'worst case' to 'middle case' scenario. The worst case is obviously easier to reach, but I generally do hit my middle case.

So I can still hit my goals.

But only if everything goes according to plan. I have to stick strictly (as of now, heh) to my original spending plans and not take advantage of any more opportunities for the next 10 weeks. And I just have to hope that I reach my sales goals.

Here's where I supply the rationalizations.

By buying such a huge amount of product as such huge savings, I've given myself more of a chance to reach those goals. By spending it now, I've given myself the entire 10 weeks of summer to try to sell.

I can make the case that this kind of behavior has kept my business going all these years: but also that it's kept me from making much of an extra profit.

Here's my reasoning as to why I just jumped all over the Summer Appreciation Sale from Diamond.

1). It keeps the inventory level high. I can sell fewer items to make back my money, or take longer to sell them.

2.) It takes me out of my ordering box. I know that 20% of my product will sell, but the other 80% is more of a gamble. Frankly, I can't tell much difference in that 80% of product between what I pay full price for and what I got a deal on.

The two examples that are most noticeable are posters and t-shirts. I'm offered dozens of each every month. I used to spend a lot of time trying to pick out the good ones, the ones that either I thought would sell or the ones that really appealed to me. Eventually, I realized I could do just about as well ordering by using a dart board.

Strangely, not everyone likes the same designs as I.

3.) It brings in a constant flow of new material. Just replacing the evergreens would keep the inventory static. At a very high level, to be sure. And most of it would be new to all the tourists.

Still, and I don't know how they do it, but customers seem to be able to pick up when you're active and when you're not. And they generally reward activity.

4.) It keeps me actively engaged in the store. This is no small thing. The more involved I am, the better the store does. Sitting back and letting sales fall where they may is almost like giving up to me.

I'm going to be challenged, over the next month, to find ways to sell the new material. To find display space. The unpack them, and sort them, and price them.

Thursday, June 11, 2009

I first saw this headline, not 10 years ago, not 20 years ago, not 30 years ago, but I swear I saw it 40 years ago, and if I'd been reading the newspaper any earlier, I probably would've seen it then.

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"Cash for Clunkers.": What's to keep me from buying a hundred dollar clunker and turning it in for a 4500.00 credit? I mean, if I was in the market for a new car?Just wondering.

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"Treasury Targets Executive Pay." This, just a couple of days after they let about 10 of the banks pay back the Tarp funds. Because those banks didn't want to be limited in executive pay. And no one sees the irony.

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"Personal Shopper." ??? This kind of headline I would've expected 3 or 4 years ago. A little surprising to see it now.

"Forced Entrepreneurs." Always been here, especially in Bend. If you wanted a decent job around here, you had to create one.

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Another new business downtown. Altera Real Estate. Interesting that salons and real estate offices are opening; they would've been the last kind I would've expected.

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Very quiet on the blogosphere. Haven't heard from H.Bruce Miller in the Source in 11 days now. The Bend Economy Bulletin Board can go a whole day or two without a comment. And BB2 is subsisting on comments about studs and the weather and Thailand recreation.

Wednesday, June 10, 2009

Before anyone thinks I'm against the arts, especially the local arts, I think the Tower Theatre is a great institution. They fixed it up nicely, and it's a great addition to downtown. It deserves to be supported.

But that's just it. It will always NEED to be supported.

The Tower Theatre needs money again. Get used to it. Every few years, they'll be in need of a new infusion. It was always going to be a White Elephant. According to the Bulletin, 60% is paid by tickets, the other 40% has to come from other sources.

Just like private business, to be viable it needs to be able to run in bad times as well as good times.

The guest editorial, by the executive Director of the Tower Foundation, is a little disingenuous, talking about what a huge "success" the Tower is in the first half, and how it is coming up short of money in the second half. Success? Maybe he's talking in terms of art.

30+ events doesn't sound all that impressive to me. That would be one event every 12 days or so, or almost two weeks between events. Hard to see how that could ever make enough money to pay for itself.

Which it can't.

Again, I'm not against the Tower. I hope they can come up with the funds.

The only reason I'm talking about it is because I remember how this was sold to the public -- versus what has actually happened. If they had come to the public and said, "This is going to be a public supported art center," that would've been one thing. But I remember them telling us how it would be self-supporting, and anyone who pointed out that it probably never would be, was against the arts.

I'm sure most residents of Bend don't even remember how the money was raised for this -- not much institutional memory around here. But whenever someone tells me that a business model that obviously wouldn't work as a private enterprise is somehow magically going to work as a public enterprise because -- gosh, it's public -- then I'm extremely skeptical.

It will be interesting to see if the government steps in to help -- again.

Further signs of the Decline of Western Civilization; well, at least the decline of reading among kids, which is the same thing.

Disney comics are not being published in the U.S. This is about the third or fourth time this has happened. Meanwhile, in Europe, Disney has never stopped publishing. Don Rosa and Carl Barks are household names, but here in the U.S. no one knows who they are. The biggest card game in Italy is Wizard of Mickey. Not sure I'll even bother to order it. Mickey? Who's he? Isn't he that clown in a mouse suit who gets in your kids way as they stampede to the rides at Disney World?

Nickelodeon Magazine, one of the few magazines with comic content that actually reached the general public, has ceased publishing as well. To quote from the comic site, ICV2:

"...the L.A . Times Blog said Nickelodeon Magazine "had lost value as a marketing tool in the age of Internet." Wikipedia mentioned "the declining influence of magazines for children and teenagers." And Nickelodeon television president Cyma Zarghami said in a company memo the company has "decided to exit the magazine business" at a time when print publications are "severely challenged."

Meanwhile, to quote from the Inkwell Bookstore blog, "Over 1000 teachers have signed a petition asking Scholastic to tone down the number of toys offered in its Book Club catalogs in favor of...um, well, books. The teachers say that one third of the items sold in Scholastic's 2008 elementary and middle-school catalogs were either "not books or books packaged with other non-book items."

Pretty much what I see every day in the store. No interest in the books, but lots of begging for toys.

Tuesday, June 9, 2009

I have a little trick I pull, which is kind of fun. What usually triggers it is when a Dad or Mom or Granddad or Grandma or Uncle has finished buying something for a younger kid, and prompts, "Be sure and thank the Man."

To which, I always respond. "Thank you. But really, you should thank your Mom (or Dad or....). In fact, why don't you give her a big hug!"

Never fails to elicit a warm hug, and big smiles all around. It's fun to see.

(I'm probably just reinforcing the money=love equation, but it still feels good.)

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It's beginning to sink in what a change this new budget is going to be, for the next 28 weeks, or so.

I've gotten in the habit of constantly looking for opportunities, for experimenting, for tinkering with the mix. If I've seen a really good deal, I've jumped on it, even if it stretched the budget.

Now?

I want to maintain existing inventory. Turn profits into cash instead of more product. The store is full. It is stocked in every category. I want to maintain this level for the time being, and continue to replace everything that I consider to be 'evergreen' but let everything else sell out.

If I do that, I'll still have a constantly changing product mix, but it will be more replacement than addition.

The budget is sufficient to keep the store at a high level-- but only if I don't divert some of it into a sudden impulse buy.

If you've seen my store, you know it is time.

I know it is time.

My impulses haven't quit been retrained yet. You saw how sweet temptation came at me last week, with the "Appreciation Sale" from Diamond. I managed to restrained myself to ordering just the stuff I was going to order anyway...

It is very much like dieting; in fact I often combine the two, but not this time. This time it's all about the budget.

I'm going to try to turn my idle hands into other necessary activities. Spent a couple of days last week filing comics, for which I'd fallen behind. I have to learn my new POS computer, and enter my inventory. Everything always needs a good dusting and cleaning....

About as fun as listening to someone list their diet, but there it is. It's what I need to do.

About Me

I'm Duncan McGeary, owner and/or operator for the last 33 years of Pegasus Books in Downtown Bend, Oregon. These days I'm writing books as well as selling them.
I'm the comic book guy. But even more so, I'm a book book guy. Books of all kinds. Big books and little books, children's and adult, fiction and non-fiction, hardback and paperback and trade paperback and graphic novels. Books with more words than pictures and books with more pictures than words. They are all part of the book world to me, and I love being surrounded by them every day.
I also have a second blog: Pegasus Books, where I list the product coming in over the next week.